Morphogenetic signaling constitutes one of the key cell fate diversification mechanisms whereby a gradient of a diffusible signal specifies multiple fates in a field of naive cells. While the extra cellular regulation of morphogen gradients and of the immediate receptor and signaling events are becoming progressively characterized, our understanding of the ways by which morphogens induce cell fates is still very incomplete. Analysis of the mechanisms of cell fate induction by morphogen gradients is the main goal of this proposal. We propose to combine experimental and modeling approaches to investigate how two signaling pathways interact in patterning of a developing tissue. We will study how the joint activities of the Epidermal Growth Factor (EGF) receptor and Bone Morphogenetic Protein (BMP) receptor systems pattern the follicular epithelium in the developing Drosophila egg, an established model of developmental pattern formation. First, we will carry out a multivariable analysis of transcriptional responses in this system, using three different transcriptional profiling assays (micro arrays, quantitative real-time PCR, and in situ hybridization). Second, we will use the results of these experiments to computationally explore the regulation of discovered targets of signaling crosstalk by extra cellular signals. Third, we will formulate mechanistic models for the initial patterning events in this system and use these models to explore the regulation of Pipe, the gene essential for the induction of the dorsoventral embryonic axis. We expect that, as a result of these experimental, modeling, and computational studies, the follicular epithelium will become one of the best-characterized pattern formation systems. Deregulated EGFR and BMP signaling are associated with severe developmental defects and a large number of human diseases. Given the highly conserved nature of these signaling pathways, our results will provide quantitative insights into the mechanisms of signaling crosstalk in developing and adult tissues.